Recent studies indicate that cholesterol levels alter Ab generation in cells and transgenic animals. To define the role of cholesterol in APP processing, we chose a genetic approach and took advantage of cholesterol-mutant CHO cell lines. Two of the cell lines overproduce cholesterol, one (AC29) as membrane-bound free cholesterol (4-fold), the other (25RA) as cholesteryl-esters (6-fold). The third cell line, M19, is defective in the regulation of cholesterol biosynthesis and contains 90% less free cholesterol than control cells. We stably transfected these three cholesterol-mutant cells with APP751 or APP751/V7171 and found that Af3 generation is differentially regulated in accord with the intracellular distribution of free and esterified forms of cholesterol. Ab generation was found to specifically correlate with cholesteryl-ester levels, independently of free cholesterol. Specifically, Ab secretion was reduced by ~95% in both AC29751 and AC29751/V7171 cells (lacking cholesteryl-esters) as compared to control CH0751 cells. In contrast, high levels of cholesteryl-esters in 25RA cells were associated with significantly increased Ab generation. In accord with these data, ACAT inhibitors reduced Af3 generation. We also show a possible mechanism for decreased Ab production in presence of reduced cholesteryl-esters based on accelerated PSi degradation. We also found that sphingolipids, which are tightly associated with cholesterol in cholesterol rich-domains (rafts), are strong regulators of Ab generation. These findings suggest that down regulation of cholesteryl-ester formation e.g. by specific ACAT inhibitors or modulation of membrane cholesterol may serve as a novel therapeutic strategy for treating or preventing AD. The overarching goal of this proposal is to determine how intracellular cholesterol trafficking and cellular compartmentation affect Ab generation. Specific Aim 1 is targeted at elucidating the effect of reduced cholesteryl ester levels on the processing, maturation and trafficking of both APP and BACE in neuronal and non-neuronal cells and ACAT' mice. In Specific Aim 2, we will further explore the reduction of Ab levels in the presence of low levels of cholesteryl-esters, and particularly the potential role of PSi turnover. Specific Aim 3 will test whether A13 generation requires the structural integrity of cholesterol rafts, as assessed by targeted disruption or overproduction of cholesterol-rich domains. These studies should provide a clearer understanding of the molecular and biochemicalevents involved in cholesterol-dependent regulation of Ab generation.